Answered: Apply Financial Statement Linkages to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Apply Financial Statement Linkages to Understand TransactionsConsider the effects of the independent transactions, a through g, on a company’s balance sheet, income statement, and statement of cash flow. Complete the table below to explain the effects and financial statement linkages. Use “+” to indicate the account increases and “−” to indicate the account decreases. Refer to Exhibit 2-10 as a guide for the linkages

	a	b	c	d	e	f	g
Balance Sheet
Cash
Noncash assets			355030
Total liabilities		241272
Contributed capital	35867
Retained earnings
Other equity

Statement of Cash Flows
Operating cash flow
Investing cash flow
Financing cash flow

Income Statement
Revenues
Expenses
Net income

Statement of Stockholders’ Equity
Contributed capital	+40201
Retained earnings

a. Owners invested cash in the company in exchange for shares of common stock.
b. The company received cash from the bank for a loan.
c. The company purchased equipment to manufacture goods for sale and paid with cash.
d. The company manufactured a custom piece of inventory and paid cash for materials and labor.
The company sold the inventory for more than cost, and the customer promised to pay for the inventory in 30 days.
e. The company paid monthly rent for a manufacturing space.
f. The company paid cash dividends to the owners.g. The company received cash from the customer in transaction d.

E2-30.
Apply Financial Statement Linkages to Understand Transactions
Consider the effects of the independent transactions, a through g, on a company's balance sheet, income
statement, and statement of cash flow. Complete the table below to explain the effects and financial
statement linkages. Use "+" to indicate the account increases and "-" to indicate the account decreases.
Refer to Exhibit 2-10 as a guide for the linkages.
а.
b.
C.
d.
е.
f.
g.
Balance Sheet
Cash...
Noncash assets
Total liabilities.
Contributed capital .
Retained earnings
Other equity
Statement of Cash Flows
Operating cash flow
Investing cash flow.
Financing cash flow
Income Statement
Revenues
Expenses
Net income.
Statement of Stockholders' Equity
Contributed capital.
Retained earnings
a. Owners invested cash in the company in exchange for shares of common stock.
b. The company received cash from the bank for a loan.
c. The company purchased equipment to manufacture goods for sale and paid with cash.
||
||

d. The company manufactured a custom piece of inventory and paid cash for materials and labor. The
company sold the inventory for more than cost, and the customer promised to pay for the inventory
in 30 days.
e. The company paid monthly rent for a manufacturing space.
f. The company paid cash dividends to the owners.
g. The company received cash from the customer in transaction d.

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